Nigerian ship owners seek zero duty on ship, spare parts imports …Insist domestic airline operators enjoy such incentives
Indigenous ship owners under the aegis of Nigerian Ship Owners Association NISA have made a strong case for the introduction of zero duty on the importation of vessels and spare parts in line with efforts to address the problem of low tonnage in the country and the attendant foreign domination of the shipping industry.
Recall that the Federal Government had for over five years been implementing the zero duty and Value Added Tax VAT payment on importation of commercial airplanes and spare parts for domestic airline operators, not private jets owners as a way of alleviating the cost burden and also enable them acquire standard airplanes thereby checking air mishaps.
President of NISA, Aminu Umar, who spoke in a telephone interview, noted that both deep sea and coastal shipping business in the country is largely dominated by foreigners due to the harsh environment under which the Nigerian ship owners operate, which has given rise to the demise of many of such firms with attendant loss of jobs.
He disclosed that apart from high interest rates in the country, which hover around 22-23 per cent compared to the two per cent and other incentives enjoyed by the foreign competitors, Nigerian ship owners are forced to pay 13 per cent duty on imported vessels and spare parts.
Umar, who doubles as Managing Director/CEO, Sea Transport Services Nigeria Limited, insists that the government should replicate the zero per cent duty and VAT on all aircrafts imported by all Nigerian domestic airline operators in the maritime industry to ameliorate some of the major challenges faced by the indigenous ship owners.
He said: “Indigenously owned domestic airline operators import their airplanes at zero duty. Such should be replicated for the shipping industry to enable us import ships at zero duty. It will enable many of the indigenous shipping firms to stabilise”
Investigations show that due to this harsh operating environment, out of the over 5, 000 vessels of various types and sizes that call at Nigeria’s various seaports annually, none belongs to Nigeria, as the country currently does not have any vessel on her fleet.
On the gross abuse of the Temporary Import Permit TIP by foreign shipping lines operating in the country, the NISA-boss called on the government to suspend the controversial permit through which the country is believed to have lost over $750billion since it was introduced about 20 years ago.
He also disclosed that the association is planning to make a presentation to the Comptroller General of the Nigeria Customs Service, Col. Hameed Ali, having made a similar presentation to the Ministry of Finance, on the need to suspend the policy.
He argued that when the policy was introduced about 20 years ago, it was because most Nigerian ship owners did not have the capacity to manage vessels so foreigners were given the TIP as an incentive to bring in their vessels, a development that has changed.
“The TIP should be suspended at this time. It was introduced to enhance the importation of certain equipment needed for the industrial sector.
“The government cannot continue to allow foreigners bring in their vessels at zero or one per cent duty under while we import our vessels at 12.5 per cent duty. It is to our detriment. We cannot compete with foreign shipping lines because all of operate in the same global shipping market”, Aminu said.
The TIP, which was introduced by the Federal Ministry of Finance, allows foreign ship owners to import their vessels into the country at just one per cent tariff for a period of maximum of 18 months. This compares to the 13 per cent duty paid by Nigerian ship owners.
But these foreign shipping lines now abuse the policy, as they operate the vessels for 18 months, take them back and rename them and later import it back to Nigeria.
It was as a result of this abuse that the Director-General, Nigerian Maritime Administration and Safety Agency NIMASA, Dr. Bashir Jamoh and Customs CG said recently that both agencies have resolved to join forces to block all loopholes in the administration of the TIP under which some foreign shipping companies often defraud the government by evading payment of duty and levies.